Operational review




Associate earnings increased to

R731 million


Associate earnings as a % of HEPS increased to


(FY17: R533 million)   (FY17: 15%)
% contribution to Associates revenue
% contribution to Associates revenue

Chile: Empresas Carozzí (24,4% held)

Empresas Carozzí S.A. is a Chilean company headquartered in Santiago, Chile. It is one of the largest and most respected South American food producers. The company has manufacturing operations in Chile, Peru and Argentina. Carozzí has two main business areas: fast-moving consumer goods and agro-industrial (business-to-business) products. Its main customer markets are Chile and Peru.

The Chilean economy is recovering from the economic stagnation of the last four years, evident in improving macro-economic fundamentals, while the Peruvian economy is also performing well. As such, Carozzí’s revenue growth is strong in both countries.

Carozzí’s success reflects its consistent innovation and new product development, high-quality products, well-known brands, manufacturing efficiencies and strong financial position.

Nigeria: UAC Foods

South Africa: Oceana (42,1% held)

Oceana is a leading fishing company, listed on the JSE.

It has delivered a strong performance for the year, driven primarily by increased canned fish sales volumes, improved landings for hake, horse mackerel and squid in South Africa, and Gulf menhaden in the United States. The focus remained on operational efficiencies and improved management of foreign currency exposure. A disappointing year for the Commercial Cold Storage division tempered group performance.

Headline earnings for the year ended 30 September 2018 increased by 86% after a 24% increase in operating profit before associate and joint-venture income, fair value adjustments and other operating items. Included in headline earnings is a once-off release of deferred taxation following the reduction in the federal corporate tax rate in the United States from 35% to 21%. Excluding the effect of the tax adjustment, fair value adjustments and other operating items, headline earnings increased by 45%.

Nigeria: UAC Foods (49,0% held)

UAC Foods is a leading manufacturer and marketer of convenience foods in Nigeria. Its brands span a broad spectrum of the country’s food market, specifically snacks, dairy products and beverages.

The snacks category comprises Gala sausage roll, Funtime cupcakes, Funtime coconut chips and the new Gala Chinchin (a popular regional fried snack). The dairy category includes the Supreme range of ice-cream and yoghurt products, while the beverage category includes Swan Natural Spring Water.

The business environment in the review period was challenging due to high input costs, and increased maintenance and haulage costs. These could not be recovered as the company was unable to increase selling prices for its primary offering in the snacks segment under the Gala brand.

The company embarked on several cost-savings initiatives to maintain sustainable profitable growth. Stiff competition and a challenging business environment are likely to continue as we approach 2019 elections in Nigeria.

Zimbabwe: National Food Holdings Limited (37,4% held)

National Foods is a leading branded food manufacturer in Zimbabwe. The past year saw significant political change in the country. While the government has committed to focusing on economic recovery, the country is still impacted by macro-economic challenges. Foreign currency shortages worsened in the past year and continue to create challenges for importers in settling foreign creditors. National Foods is working with the Reserve Bank given that its needs are prioritised as an importer of basic commodities.

The company’s oil division, maize business and rice trading improved. While record flour volumes were achieved, margins were significantly affected by the inability to increase prices as a result of a bread price that remained constant for the greater part of the year.

The outlook for the Zimbabwean economy remains uncertain in the aftermath of recent elections.

South Africa: Oceana